WellPoint to pay $10M in Database settlement

NY AG ends insurer practice of manipulating rates to overcharge patients

Joining other health insurers, WellPoint, Inc., the nation’s largest health insurer and parent of Anthem Blue Cross and Blue Shield of Wisconsin, reached a $10 million settlement with Andrew Cuomo, New York’s attorney general.

The agreement is the latest in Cuomo’s effort to reform the way insurers determine reimbursement rates for out-of-network services.

At the center of the scheme is Ingenix, Inc., a wholly-owned subsidiary of United Healthcare, the nation’s largest provider of health care billing information and used by many insurers to determine “usual and customary” rates. Under Cuomo’s agreement with United, the database of billing information operated by Ingenix will close.

United agreed to pay $50 million to a qualified nonprofit organization that will establish a new, independent database to help determine fair out-of-network reimbursement rates for consumers throughout the United States.

Cuomo contends that because Ingenix is a subsidiary of insurer United Healthcare, it had a vested interest in setting reimbursement rates low, allowing companies to underpay patients for out-of-network services.

Having a health insurer determine the usual and customary rate, said the New York Attorney General, “creates an incentive for the insurer to manipulate the rate downward. The creation of a new database, independently maintained by a nonprofit organization, is designed to remove this conflict of interest.”

For the past ten years, Cuomo said, “American patients have suffered from unfair reimbursements for critical medical services due to a conflict-ridden system that has been owned, operated, and manipulated by the health insurance industry.”

The United agreement “marks the end of that flawed system. As working families throughout our nation struggle with the burden of health care costs, we will make sure that health insurers keep their promise to pay their fair share.”

The industry reforms that are a part of that agreement “will bring crucial accuracy, transparency, and independence to a broken system. During these tough economic times, this agreement will keep hundreds of millions of dollars in the pockets of over one hundred million Americans.”

Minnetonka, Minn.-based insurer UnitedHealth Group (NYSE: UNH) is the parent of UnitedHealthcare of Wisconsin, Inc.

The attorney general has also struck deals with other large insurers, including Aetna (NYSE: AET), Cigna (NYSE: CI), and MVP Health Care, under which they agreed to cease using the Ingenix data and contribute to the new database.

Indianapolis-based WellPoint (NYSE: WLP), the nation’s largest health insurer, pledged $10 million toward the new database.

_______________________

Editor’s note: Database conflicts of interests are common in the collision repair industry, as well, where insurers influence inevitably creates questions about the entire validity of databases.

Nick Orso, president of the New York State Auto Collision Technicians Association (NYSACTA), also noticed the similarity in the two industries, saying it sounds “eerily familiar to the way labor, paint and materials reimbursements are made in the collision industry.” 

NYSACTA sent a letter to Cuomo requesting that state insurance regulations be enforced and that insurers do not “use biased, secret, outdated information to set and control pricing.”

* * *

Oregon auto body shops wishing to report database problems can do so by e-mailing OSAR:

info@oregoniansforsafeautorepair.com